By Staff Reporter
A Redcliff based coke making firm Zimcoke is yet to commence production two years after the commissioning of the plant due to loose ends which are yet to be tied in the transfer of assets from Ziscosteel to the coking firm.
ZimCoke Consultant Eddie Cross said the deal is expected to commence once his firm takes legal possession of the assets in question.
He told this publication that part of the deal involved taking over US$225 million in KFW Bank debt owed by Ziscosteel in 2017.
“In return an agreement of sale was signed in July 2017 for an equivalent value of Zisco assets including plant and machinery, land and buildings, railway rolling stock, shares in Zimchem and waste products on site.
“After this we had to negotiate to take over the Bank liability with KFW Bank og Frankfurt Germany,” Cross said in an interview.
He added the process involved retrieving the debt from Paris Club and securing the agreement of the German government.
“This took two years. In May 2019, the government of Zimbabwe approved the debt/asset swap in which we were given approval to proceed. Transfer of the assets was carried in August 2019. The shareholders of ZimCoke then had the subdivision surveyed and application was made to transfer title,” he said.
A sticking point in the deal according to Cross is that Ziscosteel owes over Z$10 million in rates and is unable to pay the Capital Gains Tax on the transaction we have had to request that the Redcliff Town Council issue a, “rates clearance,” certificate and for the Ministry of Finance to issue a Capital Gains Tax Exemption Certificate to enable transfer.
The process Cross said requires a valuation of the assets of Ziscosteel, “which was carried out two months ago by the Ministry of Local Government. We are waiting for the valuation to be completed.”
Production Cross said will commence after Zimcoke takes legal possession of the said assets.
“When this happens we will take ownership of the assets involved and close the deal with KFW Bank and the Ministry of Finance in Harare.”
In the meantime, Zimcoke has secured funding from Equity Shareholders to the tune of US$155 million, Bank Funding US$100 million and KFW Bank refinancing the debt to US$100 million.
“As soon as the KFW agreement is signed (shortly-it was accepted by the Attorney General’s in January 2020) and we have legal possession we will finalise funding and start the process of getting the plant back into production. This process will involve several international firms as well as local contractors and engineers,” he said.
Cross further explained that the first stage will create 400 jobs at Zimcoke with 300 jobs at Zimchem and 200 jobs at Hwange.
“Production levels will be 500 000 tonnes per annum and about 100 000 tonnes of raw materials to Zimchem. We expect the plant to be back in production in December 2020 and full production by August the following year,” he said.